J.P. Morgan Initiates Coverage On Air Lease Corp

J.P. Morgan Chase & Co. is initiating coverage on shares of Air Lease Corp AL with a Neutral rating and a $32.50 price target on shares. In a note to clients, J.P. Morgan writes, "Air Lease is the sector's growth story, with a fleet plan, capitalization, and management team that bring peer-leading credibility and a demonstrable track record for valuation, in our view. AL's earnings trajectory is both visible and meaningfully ahead of its peers', with cash earnings expected to more than double between 2011 and 2013. Measured by fleet size, AL is poised to overtake FLY this summer and AYR some time next summer. Furthermore, the company's objective is to be financed primarily by unsecured debt, and it currently enjoys significantly lower leverage than its peers (1.1x vs. 2.0-2.9x), suggesting, in our view, more reliable funding and less vulnerability to market shocks. But first-class business in a first-class way comes with a price tag: Air Lease's premium valuation already reflects said strengths, and our $32.50 PT provides a mere 14% potential upside. Until there's a better entry point for AL, we suggest investors concentrate on AER and AYR, and we have adjusted our ratings and targets accordingly." Shares of AL lost 12 cents on Friday to close at $28.43.